THE A TEAM

Oman 2016 | ECONOMY | ROUNDTABLE: ITHRAA

Ithraa leads Oman's drive to boost FDI and create a robust mix of exporters. Here, four of the Authority's key players discuss recent developments and expectations for the future of investment in Oman.

HH Sayyid Faisal Al Said
HH SAYYID FAISAL AL SAID
Director General
Investment Promotion
Taleb Al Makhmari
TALEB AL MAKHMARI
Director General
Marketing & Media
Azzan Al Busaidi
AZZAN AL BUSAIDI
Director General
Planning & Studies
Nasima Al Balushi
NASIMA AL BALUSHI
Director General
Export Development

What role does Ithraa play in Oman's economic development?

HH Sayyid Faisal Al Said The organization was established in 1997 with two objectives: to attract investment into Oman and promote and facilitate doing business with local and international investors. With regards to our investment promotion strategy, especially for 2015, we are now focusing on how to cluster three major sectors that we have promoted for the past five years: petrochemicals, logistics, and tourism. Different projects can be clustered within these sectors. We are focusing more on attracting big name companies and experienced professionals, mainly from Asia, our neighboring countries, the US, and Europe. We held a meeting for interested investors from all of the major companies operating in GCC countries, and focused on some important sectors for Oman's economy. According to our survey, 75% of 100 investors who attended that meeting would like to pursue business opportunities in Oman in the next three years. There are many positive indications that are encouraging us to continue our work in 2015. Our investment promotion plan, activated every five years, is in effect now. We are revising the sectors and target countries, re-evaluating the initiatives to introduce, and researching whether to target local or international investors. In 2015 we will be more focused on project promotion. After selecting a number of projects, we will carry out direct marketing to international investors. After the selection of one project from each potential sector and internal research regarding regulation and approval, we will approach these investors with proposals.

Taleb Al Makhmari If I were to highlight some of our recent Ithraa success stories, I would certainly include the 2013 UNCTAD Award for Excellence in Promoting Export-oriented FDI. This is a major international prize and one we're very proud of. We recently organized trade missions to Brunei, China, Italy, Iran, Ethiopia, Dubai, and Italy, and the trips were very successful and have helped strengthen our business ties with these important international markets. We also played a lead role in the success of the Omani Products Exhibitions held in Riyadh, Dubai, and Doha. This initiative was designed to help expose local companies to the many commercial opportunities available in Saudi Arabia, the UAE, and Qatar. And with mega events such as the World Cup and the World Expo coming to the region, it's important we help local businesses explore and penetrate these markets. In December 2014 we organized, for the second consecutive year, the Oman Competitiveness Forum. This attracted presenters and participants from across the globe. It was a resounding success and has become an annual flagship event for us. Having a competitive national offer is central to our work in promoting non-oil exports and attracting inward investment.

Azzan Al Busaidi The Directorate General of Planning & Studies was created to provide information on Oman's business environment as well as serve new and returning inward investors.

Nasima Al Balushi We offer many services for Omani exporters. One of the services we provide is to collate studies of different markets that have been identified for exporter strategies. We also help them participate in international exhibitions and B2B meetings, as well as business matchmaking. In terms of capacity building, we are providing training seminars on different topics for exporters. We have identified 21 countries that are lucrative for Omani exports, and we have identified 59 products that have the potential to be exported. Our activities focus on exporting those identified products to these countries. We want to increase our oil exports as well, and in 2016 we will be focusing primarily on the GCC. An exhibition in Jeddah took place through a committee called OPEX to include chambers of commerce as well as other organizations. Around 100 companies participated in different sectors over the course of three days. We participated in a fair in China for the marble industry, and two other events including one in Italy. We attended a business matchmaking event in Ethiopia, which was also very successful, with over 20 Omani exporters there to meet potential business partners.

What makes Oman an attractive place for investors?

HH Sayyid Faisal Al Said Foreign investors are mainly interested in sectors like logistics. They want to utilize Oman's location as a gateway for the GCC, making use of infrastructure in place and under construction, such as the upgrades underway at ports, airports and the railway line that will connect Duqm with the entire GCC. This infrastructure has significantly increased Duqm's opportunities to become the hub of the region within the next 10 to 15 years. Investors are also looking at petrochemicals and the downstream projects in Sohar dealing with metals, petrochemicals, and hydrocarbons. The most common word used by investors to describe Oman is stable. Oman is a stable country, politically and economically, which is important because investors are looking not only where they can do business, but where they can live and raise a family. We have built good relationships with many nations, East and West. It is a multicultural, open place. Our challenge now is how to properly promote the country to the business community, which we are working on now through building capacity and training. The market is very dynamic. If an investor is determined to do business here, it is possible. Of course some investors coming from certain countries will find the process smoother than others. We compare best practices and learn from other countries similar to us in terms of government size, population, and market. For Oman, it is very important to look into competitiveness, and Ithraa lobbies government agencies to improve conditions. Doing business in Oman is becoming more attractive to investors, though we need to continue to revise investment law and regulations to minimize procedures.

Taleb Al Makhmari With the impact of globalization and the rise of the “Attraction Economy," it's increasingly important that Oman gets its international image right. Essentially, we're up against every country in the world competing for the consumers' attention and respect. Let's be clear, consumers are attracted to clear and consistent messages about things they value, from competent governance and friendly and hospitable people to financial transparency and investment opportunities. It's in these areas that Ithraa is working with a host of public and private sector partners to present unified and coherent messages. As a nation, Oman's always seeking to enhance its role in the global economy by making the most of the opportunities created by new or established global markets. For that to happen, Ithraa is actively encouraging and supporting more Omani businesses to sell their goods and services overseas and it's attracting more quality international investment. Indeed, all of this will help realize the goals and objectives outlined in Vision 2020.

Azzan Al Busaidi The regulations are changing, and primarily the business environment could be described as favorable. If we look at economic growth in 2014, 4.6% and 10% stemmed from non-oil activities. Oil activities actually decreased by 2.4%. This suggests that the environment in Oman is conducive, and that it attracts growth and investments. FDI accumulated around OMR36 billion ($93.49 billion) in 2014, and this is also an indicator that, despite the changes, it is still a market where people would like to do business. There have been some areas where Oman needs to work harder in order to improve the investment environment both from a regional and international perspective. There are a mix of challenges, some to do with internal laws and regulations that have to constantly be reviewed and approved. All countries in the region have a similar vision to diversify their economies, develop the private sector, and increase the creation of jobs. The competition will be quite stiff, but Oman has the potential to grow its private sector and succeed.

Nasima Al Balushi The mining sector is booming now. We are trying to focus on diversifying into all sectors and not just the ones that are growing. We are encouraging companies from different sectors to go internationally with their products. Trade delegations are beneficial because they do not encompass just one particular sector like exhibitions do. We are trying to shift more of our exports to Africa because we see a lot of potential there. We believe this will help Omani companies diversify their markets, instead of just exporting to the region.

What have been the main activities of Ithraa in the past year?

HH Sayyid Faisal Al Said In 2014 we saw major activity in our target market. We received many visits from interested investors, and negotiations commenced between potential foreign investors and Omani investors. Ithraa visited Brazil, Japan, Singapore, and India. In April 2014 we planned an Omani-Brazilian business forum. One potential investor from the forum has begun negotiations and trial agreements with some local oil and gas companies. We arranged another forum in Tokyo last October, focusing on aquaculture, fisheries, some manufacturing industries, such as automotive spare parts, as well as logistics. From that event, we have found investors interested in an ongoing discussion about opportunities in Oman, resulting in 15 investor visits.

Taleb Al Makhmari We work closely with domestic exporters and run an annual visit program to Omani manufacturers, which helps us identify any export challenges or obstacles encountered by domestic firms. The field visits also provide us with an opportunity to brief domestic exporters on Ithraa-led activities and services. We've also identified importers of Omani products and have invited them to visit the Sultanate. In this regard, we organize regular B2B matchmaking meetings, which link Omani exporters with international buyers. On the international front, we have trade and investment representatives in key global markets, all actively involved in promoting Omani products as well as investment opportunities. Indeed, helping domestic companies penetrate mature as well as emerging markets is extremely important to us. In fact, we've had considerable success in this regard and the number of Omani firms exporting to international markets continues to rise. With regards to more mature markets, we've been helping local companies participate in major international trade shows in the Gulf, the US, Asia, Africa, and Europe. We've also been encouraging Omani exporters to take advantage of the Oman-US Free Trade Agreement, which has seen our non-oil exports to the US reach over $480 million in 2013. Exports matter because they represent the very sectors that drive wealth, attract investment and talent, boost productivity and innovation, and generate employment. The production of exported goods and services creates jobs, both directly and indirectly in the supply chain. One study finds that every $1 billion in new exports creates 5,400 additional jobs. In fact, SMEs that export generally experience greater revenue growth than non-exporters and weather tough economic times better as a result; in one international study, SME manufacturing exporters grew revenues by 37% while non-exporting manufacturers experienced a 7% decline in revenues

How can investment in education support competitiveness?

Azzan Al Busaidi Human resources are just like any other resource in a business, and human resources require a set of things such as healthcare, housing, and proper infrastructure. We need to widen the base to accommodate these resources. The majority of the resources today work for the public sector, and additional investments need to be made. SMEs need to be widened because they are renowned to be responsible for creating a large number of jobs in developed economies. In terms of education, it is an area where a lot is going on in both primary and secondary schools. The importance of the curriculum is taking pace with what is happening around the world. The focus must be on science and mathematics, and even at a higher level at training institutes, colleges, and universities. Education can be tricky because it takes a long time to see positive change happening. The government's focus on SMEs is in alignment with this, and the percentage of students in 2014 who wanted to join the private sector cannot even compare with today. Today, there is a growing understanding and commitment from the youth in either joining the private sector or establishing their own businesses. That is a clear indication that the entrepreneurship spirit is reemerging in Oman.

What is your evaluation of the current foreign export and investment environment for Omani companies?

Nasima Al Balushi There are many political issues that are happening, which pose both an opportunity and a threat for the Omani exporters. For example, we are dealing with tariff barriers in many countries in the GCC; standards are also being changed constantly, and we are not being informed properly. When exporters try to reach those more difficult markets and they are not informed, the financial difficulties can be harmful. The most important part is to work on interfering with the tariffs and facing different challenges through collaboration with the government.

HH Sayyid Faisal Al Said In this region, there are many markets, such as Iran, Pakistan, and India, presenting a number of opportunities. Ethiopia, with a population of over 90 million people, holds potential for Omani companies to increase their size of business, establish new ties with companies in these markets, and utilize the multilateral agreements we have in place. Oman is two steps ahead because we have an FTA with the US and a logistics advantage. Any company wanting to enter the US market can do so using Oman as a base. We have also a multilateral agreement in place that makes Oman a backyard corridor for Central Asia countries going to Iran. There are a lot of opportunities and channels that can be used in this regard.

Taleb Al Makhmari Omani companies that are new to exporting often need help getting started. Even companies that are aware of global opportunities often prefer operating within the confines of Oman's market, where they have successfully grown their businesses. Led by Nasima Al Balushi, Ithraa's Export Development Directorate is taking a proactive approach to supporting the export efforts of Omani businesses, ensuring, for example, that local firms are well-represented at important trade shows around the world. We understand that Omani companies require assistance expanding into foreign markets due to their own internal constraints and perceived trade barriers. Businesses have suggested that challenges with customs and compliance, distributors, intellectual property protection, financing, marketing, packaging, and language barriers are some of the biggest barriers to becoming exporters. In response to these challenges, Ithraa created the Trade Up seminar series, which is designed to help Omani enterprises that are new to overseas trade take the plunge, as well as assist those already trading overseas to increase sales. Through the Trade Up series, we have tapped into the experiences of seasoned exporters to give businesses ideas and advice on how to avoid the main pitfalls and build a successful book of export business.

Can you highlight some of the most important roles in which e-services and ICT initiatives are being implemented on a business and government level?

Azzan Al Busaidi What we are doing is part of the government's vision for developing e-government as a single platform for nationals and residents or even investors overseas. We recently signed an agreement with the Ministry of Commerce and Industry allowing us to issue commercial registrations for foreign investors from abroad with investments from OMR1 million ($2.6 million) and above. We are working on making this service available online so that investors do not have to be in the country to benefit from services. According to the press and those concerned in this field, more than half of the services are available online. The aim is to try and increase the number of services provided online to the fullest in the next three to five years. There are two levels, and we need to explore the services by the government to the investors, or try and push other government departments to expedite the process of providing their services on their websites to the general public. The development is positive on both ends.

What major opportunities do you see coming up in the next year?

Nasima Al Balushi Every year we are trying to increase the number of events and countries in which we will be attending events. Before we were considering one or two exhibitions, but we have developed substantially over the past few years. We are focused more on trade delegations in addition to the exhibitions with a focus on capacity building for the exporters too. Each and every one of the companies that have utilized our capacity building has been able to find a partner and market for their products. We are constantly conducting market studies for potential export opportunities, such as in Singapore and Egypt. We have a traditional presence in the GCC because it is easier to start exporting to neighbouring countries. Looking at culture and language, it is much easier in these areas.